Bitcoin Hard Fork Developers Are Free From FinCEN Regulation

Up until this point, FinCEN has clearly defined projects related to digital currency and Bitcoin do not fall in the same category as prepaid access sellers or providers.

The Bitcoin Classic hard fork solution could lead to legal trouble down the line. Or that was the assumption at least, even though no one was able to confirm this statement at that time. An interesting question was raised, though, and the answer will put a lot of people’s mind at ease: the current FinCEN guidelines will not get developers in legal trouble.

No FinCEN Implications For Bitcoin Developers

Most of this discussion started from the point of view that hard forking Bitcoin would make Bitcoin Classic a separate money services business. After all, the bitcoins mined on that blockchain would be far different from any other bitcoin found on the Bitcoin Core blockchain. But whereas the latter is abiding by FinCEN regulations and guidelines, Bitcoin Classic is not.

As it turns out, there is no reason to worry about FinCEN implications if the Bitcoin Classic hard fork would occur. Some people considered the option of legal consequences for the project developers, all of whom are publicly listed on the website. But as it turns out, there is no reason to worry about any implications just yet.

Based on the information found in the current FinCEN regulation draft – created back in 2013 – there is no need to assume hard forking Bitcoin would make the new solution a money services business. No administrator is overseeing the Bitcoin protocol for FinCEN regulations, which also removes the need for developers to register as a money transmitter.

Up until this point, FinCEN has clearly defined projects related to digital currency and Bitcoin do not fall into the same category as prepaid access sellers or providers. Additionally, digital currency exchanges are not labelled as foreign exchanges either, and there are absolutely no ties with postal offices or checks in any way.

However, a separate set of rules has been drawn up in 2013, specifically targeting Bitcoin and digital currency projects. As a result, of these guidelines, several activities related to Bitcoin and digital currency can be classified as money transmission. Among these listed activities are “exchanging” and “administering”. Luckily, neither developers nor miners fall into either category and are in the clear.

Walking A Fine Line

Keeping in mind how miners are not involved in the process of transmitting or accepting the digital currency, they are entirely exempt from the FinCEN guidelines. Bitcoin is not issued by a bank or does not come in the form of checks. It is important to keep in mind this situation is not affected by the number of miners on the Bitcoin network.

Software developers fall into the same boat as Bitcoin miners, as they are not responsible for accepting or transmitting money. Production of software is not related to being a money service business, even if that code would make it easier to sell digital currency. But that does not mean this situation will not change in the years to come.

FinCEN regulators could take a keen interest in this ongoing block size debate, and decide to come up with a different set of rules for the future. Both miners and developers could then be affected by these new guidelines, and it is impossible to predict what the consequences could be. The outcome could be either positive or negative for Bitcoin, miners, and developers, depending on how this block size debate turns out.

Published by

JP Buntinx

JP is working hard to bring more credibility to the Bitcoin and blockchain news industry. Outside of being Europe Editor at Newsbtc, JP is also an active writer for the website, and does not shy away from letting his opinion be heard.
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